The index has now fallen in five out of the last six months and stands 32 points below its interim peak of 84 seen in February of this year.
The decrease in sentiment during October was led by continued pessimism towards the future situation, with the Expectations Index falling by four points to 70 – the lowest level this measure has reached since March 2009.
By contrast, faith in the present situation and spending both picked up during October. Most notably, the Spending Index recovered some of the ground lost in September with an increase of six points to 92. Likewise, the Present Situation Index rose by three points to 25 following a five point fall in September.
Consumers expressed a growing pessimism towards the housing market in October and now expect the value of their home to decrease by 0.9% over the next six months. This compares to an increase of 0.1% predicted in September.
Martin Gahbauer, chief economist at Nationwide, says: “There was little change to overall confidence during October, which may have been a result of consumers waiting to see what the Government’s Spending Review would bring.
“We saw a significant drop in confidence the previous month, and the underlying anxiety around the strength and direction of the recovery appears to remain. However, on a positive note, there are signs this month that some faith has returned in relation to the present situation and consumers’ propensity to spend in the run up to Christmas. Nevertheless, this should not be overstated as levels of optimism here remain low compared to historical figures and still well below their long-run averages.
” Expectations continued to trend downwards during October and this may be due to consumers understanding that changes announced in the Spending Review will be implemented over several years rather than take effect straight away.”